When you finally find the ideal apartment, there’s more to consider than just your monthly carrying costs. There’s also the possibility that you could get walloped with a hefty assessment for major items like new elevators, a new roof, new boiler and exterior maintenance – as well as reserve-draining lawsuits. Assessment charges can run into the four and five figures (sometimes more!). And they’re apportioned according to the number of co-op shares owned or the square footage of a condo.

It’s time for a super sleuth.

As a potential buyer, you have the right to an in-depth look at a building’s financials and meeting records to see the kind of issues a building has been dealing with over the past few years, what projects are under discussion for the next year or two, as well as the size of a building’s reserve fund. But this isn’t a job for you. This is where I direct my clients to the most experienced real estate lawyers - who know where to look and know all the tough questions to ask. Your attorney is in charge of all necessary due diligence, and is your main point of contact with the building’s manager and board. 

• In smaller buildings, items like boiler and elevator replacement can cause significant assessments (as high as $10,000-$20,000 an apartment in a 30-unit building).

• Larger buildings spread out the costs of capital improvements, but they’re still susceptible to big-ticket jobs like mandated façade repairs, which can run into the seven figures.

• New condos frequently underestimate the financial reserve required for future maintenance – a lack of funds that can be passed on to residents as large assessments.

• Beware of below-market maintenance fees – this can hide ongoing assessments with no end date. 

• Stay clear of buildings currently involved in lawsuits with workers or tenants.

• A reliance on temporary building fixes can be signs of improper upkeep and maintenance shortcuts.

After the past few months of robust (and reassuring) sales activity, real estate is experiencing a bit of “wait & see” scenario these days, mostly a reaction to rising Covid cases as well as a typical summer slumber. At times like this, the guiding expertise of a real estate professional is especially important. Let’s save Surprises! for the next big birthday.